S&P: Fewer CCC Loans Ups CLO Performance

U.S.-originated collateralized loan obligations (CLOs) that are tracked in an index compiled by Standard & Poor’s show that fewer ‘CCC’-rated loans in their pools translate into better performance for transactions.

This was in the case in Q4, when the agency dunked six obligors with loans in CLO pools to the ‘CCC’ category, compared to twelve in Q3. The combination of fewer downgrades in Q4 and some upgrades out of the ‘CCC’ grade reduced the overall number of ‘CCC’ loans backing deals in the CLO index. This, in turn, boosted the performance of the transactions.